Monthly subscriptions are becoming the preferred payment method for car buyers purchasing maintenance plans, according to a business specialising in managing manufacturer service plans.
EMaC reports demand for maintenance plans payable by monthly instalments have risen by over 1000% in the year to date and are on course to overtake one-off fixed term payments for the first time.
The automotive retention solutions provider believes dealers are increasingly offering this payment method due to the ongoing impact of the cost of living crisis, high inflation, Consumer Duty and an increased focus on customer retention.
Maintenance plans typically cover services such as extended warranties, scheduled servicing, brakes, wipers, batteries, tyres, alloy wheels, SMART bodywork repairs, MoTs and breakdown assistance.
“The first three quarters of this year have seen a significant year-on-year increase in demand for maintenance plan subscriptions, which we believe is a result of our new and existing clients adapting to rapidly changing financial and regulatory market conditions, as well as a renewed focus on longer term aftersales income,” said Serkan Obuz, EMaC’s director, maintenance plans.
“This has been further accelerated by increased finance rates and restrictions from lenders making it harder for many buyers to afford one-off fixed term payments.
“For dealers the added flexibility of offering value-added products payable by subscription enables them to open new conversations about vehicle maintenance and build workshop retention.
“With consumers able to access monthly payments and subscriptions across many retail sectors, car retailers are now in a position to offer a more affordable payment solution that resonates with their customers,” he said.
“At the current run-rate we expect maintenance plans paid for on subscription to overtake fixed payments by the end of the year,” said Obuz.